What To Look For When Buying A Franchise
When buying a franchise there are lots of things to be considered. Some more obvious than others. When looking for your perfect franchise, some of that perfection is going to be what they see in you just as much as what you see in them. When discussing franchise opportunities with others it is generally suggested that they keep the following things in mind:
Your current financial position will play a major role in buying a franchise. Do you have the money to buy a franchise? If not, where are you going to get the capital? Some franchises require little more than just a small franchise fee, others require real estate investments, hiring staff, buying merchandise/inventory and other asset purchases. The amount you have to invest will be the deciding factor on choosing the right opportunity.
Another important factor when buying a franchise is the sustainability of your financial position. If you just invested all your money in your new franchise, now how long can you survive before you see the “steak” ? To some, a near immediate cash flow to live on is critical while others are able to wait months and even years before their investment starts paying off. Make sure that you have additional sources of financing, including friends or relatives who might be able to loan you money in the event that your initial financing proves inadequate.
The desired business type and model is the next governing factor that will help you decide on the right opportunity. You would probably be amazed at the number of happy and successful franchise owners who initially started looking at franchises thinking they wanted to own a fast food franchise yet after serious research ended up with a cleaning franchise! Everyone has certain industries they think they would love to work in and that is understandable, but it’s important to keep an open mind out there. Do not get your heart set on being the proud owner of a certain brand and end up forcing a square peg into a round hole and miss out on more realistic and feasible business opportunities. Absolutely seek something you think you will love doing, but keep an open mind as well.
When buying a franchise always take your experience into account. What you have done in the past and what you are good at will help your franchise grow. Some franchises are looking for people with very specific sets of skills and experience while others actually prefer training them from scratch.
Get advice from someone who is familiar with buying a franchise. Be clear about the fact that you are looking for a business that gives you a day to day job or are you simply looking to make a sound investment and put others to work? Or both? Some franchises demand that you own and operate your franchise while others allow you to be an absent owner. This is also something a qualified franchise consultant can help you research.
Again, before buying a franchise be clear about the fact that are you looking to own and operate this business for many years to come or just sell it to another investor? Do you see yourself owning one single franchise or do you have your site set on owning several franchises across your state or region?
These are just a few of the things you need to consider before buying a franchise. Use your heart, but also use your head, your pencil, your calculator, your accountant, your attorney, your family and any other resource to help you make that significant decision.